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February 2013


From the editors of CCH Federal Securities Law Reporter, CCH Blue Sky Law Reporter and the securities publications of Aspen Publishers, this update describes important developments covered in these publications, as well as timely topics of interest generally to federal and state securities practitioners. This update includes a preview of IPO Vital Signs, an advanced IPO research analysis tool, for IPO professionals and pre-IPO companies and a preview of RBsource, a new all-in-one online securities law resource, powered by the Securities Redbook. Finally, please see the “Hot Topic of the Month,” for research tips and references to CCH and Aspen source material on point.

 To view past issues of the Securities Update, please visit

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Securities Regulation Daily

The law changes every day. The tools you use need to change with it. Introducing Wolters Kluwer Securities Regulation Daily — a daily news service created by attorneys for attorneys — providing same-day coverage of breaking news and developments for federal and state securities — including the latest securities-related rulemaking, no-action letters, SEC staff comment letters, updates on litigation, and a wealth of other SEC activity, plus a complete report of the daily securities law news that affects your world.

Securities Regulation Daily subscribers get special copyright permissions to forward information to colleagues or clients; the option to customize your daily email by topic and/or jurisdiction; the ability to receive breaking news email alerts; time-saving mobile apps for iPhone®, iPad®, BlackBerry®, or Android®; access to all links to cases and other referenced primary source content without being prompted for user name and password; and a searchable archival database.


Financial Reform Resources



CCH Federal Securities Law Reporter

Sunset of Interim Securities-Based Swaps Exemptions Prolonged. The SEC has extended the sunset date of temporary exemptions for pre-Dodd-Frank securities-based swap agreements from February 11, 2013, to February 11, 2014. The affected temporary rules govern security-based swap agreements that are "securities" as of July 16, 2011, the effective date of Dodd-Frank Title VII. The extension applies to Securities Act Rule 240(c), Exchange Act Rules 12a-11(b) and 12h-1(i), and Trust Indenture Act Rule 4d-12.

The SEC said it likely would not finish evaluating the impact of treating securities-based swap agreements as securities under Dodd-Frank prior to the temporary rules’ current February 2013 sunset. The SEC also said it needs more time to evaluate comments it received on the interim rules. A comment by Kenneth E. Bentsen, Jr., the Securities Industry and Financial Markets Association’s Executive Vice President, Public Policy and Advocacy, had requested an extension to July 17, 2013, to allow the SEC time to address open questions and prepare markets for Dodd-Frank compliance. As a result, the SEC opted to extend the temporary rules to avoid possible market disruptions.

Additionally, the SEC’s Division of Corporation Finance had previously issued no-action relief for security-based swaps that are based on or reference only loans or loan indexes because these security-based swaps are omitted from the definition of "security-based swap agreement." According to the extending release, CorpFin’s Cleary Gottlieb no-action letter dealing with these instruments is effective until the temporary rules expire. Release No. 33-9383 will be reported at ¶80,239

SEC Extends Lost Securityholder Search Requirements to Brokers. The SEC adopted amendments to Rule 240.17Ad-17 to extend to broker-dealers obligations to search for lost securityholders, and also adopted new Rule 15b1-6 to help notify brokers of the new requirements. The Dodd-Frank Act, which mandated the rulemaking with an original deadline of July 22, 2011, directed the SEC to extend Exchange Act Rule 17Ad-17’s obligations for transfer agents to every broker or dealer that has customer security accounts that include accounts of lost securityholders. The amendments also add a requirement that paying agents notify unresponsive payees that a paying agent has sent a securityholder a check that has not been negotiated. The rule proposal received 14 comment letters, according to the release, and was implemented largely as proposed on March 18, 2011. Commenters did suggest that the proposal’s estimated cost of compliance was too low, the release noted, so the SEC revised the estimate of the cost of the rule in economic analysis contained in the final rule release. The amendments are effective March 25, 2013 and compliance is required by January 23, 2014. Release No. 34-68668 is reported at ¶80,234

2nd Circuit Panel Affirms Dismissal of Fraud Action Against Citigroup. A district court judgment dismissing a complaint alleging securities law and common law fraud against Citigroup, Inc. was affirmed by a 2nd Circuit panel by summary order. The complaint alleged that Citigroup made misstatements or omissions of material fact with respect to its capitalization and liquidity. The plaintiffs also brought a controlling person claim against Citigroup's former CEO, Vikram Pandit. The district court dismissed the complaint for failure to state a claim and denied leave to amend.

On appeal, the panel concluded that the complaint's misrepresentation claim failed with respect to Citigroup's statements about its capitalization. According to the panel, the plaintiff failed to point out any misrepresentations or omissions. The court explained that Citigroup’s statements that it was "well-capitalized" were not misleading because Citigroup met the regulatory definition of the term when those statements were made. Also, while the complaint alleged that Citigroup took actions suggesting that it risked falling under the well-capitalized threshold, it failed to show that there was a duty to disclose those actions.

The plaintiff successfully pleaded that Citigroup made misrepresentations and omissions in its statements about its liquidity, the panel found. This claim failed, however, because the plaintiff failed to adequately plead that his reliance on these statements was the proximate cause of his loss. The plaintiff, the court wrote, failed to plausibly allege that there was a relation between Citigroup's statements about its liquidity and the five events that the complaint asserted revealed Citigroup's liquidity deficiencies. The complaint further failed to distinguish between the effects of the alleged fraud and the adverse market conditions during the time at issue.

The panel then held that the complaint's common law claims under New York law failed for the same reasons as its federal securities fraud claims failed. Finally, the controlling person claim against Pandit failed because a primary violation by Citigroup was not successfully pleaded. The panel rejected the plaintiff's remaining arguments as without merit and accordingly affirmed the judgment of the district court. Solow v. Citigroup, Inc. (2ndCir) is reported at ¶97,260.

Short-Swing Rule Not Applicable to Stocks with Different Voting Rights. In the absence of guidance from the SEC, a 2nd Circuit panel held that the Exchange Act Section 16(b) short-swing profit rule does not apply to an insider’s purchase and sale of shares of different types of stock in the same company. The court held that such a purchase does not trigger liability under Section 16(b) if the transactions involve separately traded, nonconvertible stocks with different voting rights.

According to the court, a director and large shareholder of a company engaged in nine sales of the company's "Series C" stock and ten purchases of its "Series A" stock. The "Series C" stock did not confer any voting rights, while the "Series A" stock did, and neither type was convertible into the other. A shareholder later brought suit seeking disgorgement of the profits realized from these transactions. The district court dismissed the complaint for failure to state a claim, explaining that the statute’s use of the term "any equity security" in the singular undermined the shareholder's argument and noting further that the two series were not functionally equivalent under Section 16(b).

The issue on appeal was the same as that before the district court: whether the short-swing profit rule applies when a corporate insider sells shares of one type of stock issued by the insider’s company and then buys shares of a different type of stock in that same company. The appellate court first examined the statutory text and concluded that "Congress' use of the singular term "any equity security" supports an inference that transactions involving different equity securities cannot be paired under Section 16(b)." The court agreed with the district court's explanation that the "purchase and sale" under the statute must be directed to the same equity security. The court then remarked that it has been its "longstanding view" that while a literal reading of Section 16(b) might permit a recovery in a situation like that presented here, the likelihood "that Congress intended such a result is beyond the realm of judicial fantasy."

The shareholder argued that the Series A and C stocks were "the same security" under the short-swing rule because they were economically equivalent. The court agreed that "essentially indistinguishable securities" would be equivalent and at risk of short-swing speculation, but, in this case, the two stock series were "readily distinguishable," most importantly in their different voting rights. The court explained that the stocks were distinct not merely in name but also in substance and that an insider could prefer one security over the other for reasons unrelated to short-swing profits. The stocks are also not economically equivalent because they are nonconvertible securities whose prices fluctuate relative to one another.

Finally, the court rejected the argument that the series were sufficiently similar to be paired under Section 16(b). The court remarked that this interpretation is plausible, but stated that it would not "go down this road absent SEC direction." First, the statute requires sameness, not similarity, the court wrote. Second, to allow a doctrine of similarity would, the court stated, create administrative concerns that would be contrary to the statute's stated purpose of being "simple and arbitrary in its application." The court accordingly affirmed the judgment of the district court. Gibbons v. Malone (2ndCir) is reported at ¶97,250.

Accountant Ignored Red Flags Showing Lack of “Economic Substance.” A 6th Circuit panel affirmed a district court judgment finding the former chief accounting officer for Delphi Corporation, Paul R. Free, liable for a number of violations of federal securities laws. The SEC brought a civil enforcement action against Free, Delphi and certain other former Delphi officers and executives in connection with the accounting of four transactions that resulted in the automotive parts manufacturer issuing amended financial reports for 2000 and 2001. This opinion was not recommended for full-text publication.

While Free was found liable on all four transactions, he challenged on appeal the jury's verdicts regarding two of the transactions. The "Bank One" transaction involved the sale of Delphi's inventory of metals used in manufacturing catalytic converters to Bank One. At the same time, Delphi agreed to repurchase the entire inventory in 30 days. Free recorded this transaction as a sale rather than as inventory financing, which allowed Delphi to increase its income for 2000 by the $198 million "sale price" of the inventory. In another transaction (the "EDS transaction") Delphi demanded a $50 million "rebate" from a supplier. Here, there was a side agreement according to which Delphi agreed to repay part of the rebate in installments, which made the rebate a loan that should have been recorded as a liability instead of income.

The jury found that Free violated the antifraud provisions of the Exchange Act in accounting for the Bank One and EDS transactions. Free then filed a motion for judgment as a matter of law, arguing that he acted in good faith and that the SEC failed to establish "some of the traditional indicia of scienter." The court denied the motion, finding that the jury could have concluded that Free was reckless and, thus, acted with scienter.

On appeal Free argued the evidence was insufficient for the jury to find that he acted with scienter. Free contended that he acted reasonably with respect to each transaction by, among other things, relying on the advice of experienced subordinates and vetting them with outside auditors. He also maintained that the district court cited documents he did not know about and substituted attacks on his credibility for a culpable state of mind. The appellate panel concluded there was sufficient evidence showing that Free acted recklessly with regard to the Bank One transaction. Writing for the panel, Senior Judge Beckwith stated that there were at least five red flags about the legitimacy of this transaction, but Free failed to conduct a critical investigation of the substance of the transaction before approving the accounting. A reasonable juror, the judge wrote, could have, therefore, concluded that Free was willfully blind or reckless about the true nature of the transaction.

The panel also found that the jury's verdict on the EDS transaction was supported by the evidence. Again, there were multiple red flags that should have alerted Free to the true nature of the transaction. The panel also pointed to multiple documents known to Free that indicated the "rebate" would be repaid. As in the Bank One transaction, Free failed to conduct an investigation that would have revealed the true nature of the transaction, and there was sufficient evidence for the jury to conclude that Free was reckless. The panel accordingly found that the district court did not abuse its discretion and affirmed the judgment. SEC v. Delphi Corporation (6thCir) is reported at ¶97,233.

11th Circuit Affirms Dismissal of Suit for Failure to Show Loss Causation. The U.S. Court of Appeals for the 11th Circuit has affirmed the dismissal of a securities fraud class action brought under Exchange Act Section 10(b) where the plaintiffs failed to allege loss causation. The case arose from allegations that Strayer Education, Inc. and its executives misled investors about the nature of its student recruitment and enrollment methods. The court similarly affirmed dismissal of related controlling person claims because the plaintiffs failed to allege primary securities law violations. This opinion is unpublished.

Plaintiffs had alleged that Strayer’s false or misleading statements about student enrollment spurred a stock price drop for investors who bought Strayer common stock between November 1, 2007 and January 7, 2011. The complaint alleged loss causation based on a Q&A session between Strayer’s CEO and a stock analyst at a January 10, 2011 investor conference call. The analyst had asked the CEO about the reasons for declining enrollments (starts). Specifically, the analyst wanted to know if negative publicity was still the "only plausible explanation." The CEO replied that for several months Strayer had been "distracted internally" by media reports about falling starts and by "actual governmental activity."

The district court found these statements innocuous for loss causation purposes because they did not imply an admission by Strayer to improper recruitment and enrollment practices. According to the Eleventh Circuit, the CEO admitted only that complying with government oversight consumes scarce corporate resources and that adverse publicity about the for-profit education industry in general explained the drop in starts rather changes in Strayer’s recruitment or enrollment policies.

The Eleventh Circuit, citing the Supreme Court’s Twombly opinion, said plaintiffs here alleged the mere possibility of loss without explicitly alleging that Strayer changed its policies due to government pressure. Plaintiffs similarly failed to allege that Strayer’s prior student policies ran afoul of then applicable laws. The court also declined to resolve ambiguities in the CEO’s statements in plaintiffs’ favor. As a result, the court found no loss causation because plaintiffs failed to show omissions from Strayer’s disclosures or that Strayer had corrected its prior disclosures. Kinnett v. Strayer Education, Inc. (11thCir) is reported at ¶97,227.


CCH Blue Sky Law Reporter  

Alabama Permits Performance Based Fees for Investment Advisers Whose Clients are “Qualified Investors.” The Alabama Securities Commission’s long-standing prohibition against performance based fees for investment advisers was revised by administrative order to permit the fees for advisers whose clients are qualified investors. ¶7579.

California Proposes Requiring Social Security or Federal Taxpayer Identification Numbers From Broker-Dealer, Agent and Investment Adviser Applicants. The California Department of Corporations proposed rule amendments requiring broker-dealer, agent and non-sole proprietor investment adviser licensing applicants to include their social security or federal taxpayer identification numbers on application Forms BD, U-4 and ADV, respectively. While the federal Privacy Act of 1974 prohibits state agencies from denying individuals any legal rights, benefits or privileges because they refuse to disclose the numbers, their applications may, nevertheless, be denied because of failure to do so. ¶12,168 - ¶12,170 and ¶12,211.

Georgia Adopts Definition of “Individual” for Invest Exemption and Fee Schedule for Routine Exam of Mid-Size Advisers. The definition of an individual representing an issuer for the Invest Georgia Exemption was adopted by the Georgia Secretary of State’s Office, along with a fee schedule for routine examinations of mid-size advisers having switched from SEC to state registration. ¶18,420 and ¶18,447.

Hawaii Extends 2012 Reduced Fees For IAs, IA Reps. and Investment Companies Into 2013. The 2012 reduced fees for Hawaii-transacting investment advisers, investment adviser representatives and investment companies were extended for 2013 by the Business Registration Division of the Hawaii Department of Commerce and Consumer Affairs. The following reduced fee amounts from 2012 apply in 2013: (1) Investment adviser initial application and renewal, $50; (2) Investment adviser representative initial application and renewal, $25; (3) Investment company securities initial filing, $100; and (4) Investment company securities renewal filing, $25. ¶20,567.

Kansas Securities Commissioner Waives Direct Fee Deduction, Audited Balance Sheet and Adjusted Net Worth Requirements for Certain Investment Advisers. The direct fee deduction provision for investment advisers with custody of client funds or securities, as well as the audited balance sheet and adjustment net worth requirements for investment advisers with custody or discretionary authority over client funds or securities, were waived by special order of the Kansas Securities Commissioner. The direct fee provision required investment advisers with custody to deduct their advisory fees from client accounts held by a qualified custodian, and to simultaneously notify the qualified custodian of the fee deduction and provide each client with an invoice of the fees and itemized fee calculation. The balance sheet provision required investment advisers having custody or discretionary authority and over $500 in fees from clients at least six months in advance of service, to have a balance sheet audited and reported on by an independent CPA. The adjusted net worth provision required investment advisers to maintain at all times a minimum adjusted net worth of $35,000 if they have custody, or $10,000 if they have discretionary authority. ¶26,648.

Louisiana Sets Forth Unethical Practice Rules for Dealers, Salesmen, IA’s and IA Reps. Dishonest, unethical practice rules for dealers, salesmen, investment advisers and investment adviser representatives were adopted by the Louisiana Securities Commission. Dealers, salesmen, investment advisers and investment adviser representatives may not recommend unsuitable securities to their customers or clients, respectively. Dealers and salesmen may not unjustifiably delay securities deliveries, induce excess trading in customer accounts or engage in other specified practices. Investment advisers and investment adviser representatives may not exercise discretionary power over their clients’ accounts without obtaining the clients’ consent; borrow money from, or loan money to, a client unless the client (in the case of borrowing) or the investment adviser (in the case of lending) are certain entity types; or engage in other specified practices. ¶28,531 - ¶28,533.

Virginia Proposes BD, Agent, IA, IA Rep., Securities Registration and Exemption Changes. Amendments to broker-dealer, agent, investment adviser and investment adviser representative registration and post-registration requirements, and changes to federal covered adviser notice requirements, were proposed by the Division of Securities and Retail Franchising of the Virginia Corporation Commission, along with proposals to add a stock exchange exemption for options and warrants, to repeal certain existing exchange listing exemptions, to incorporate a NASAA policy statement and to define additional securities-related terms. Public comment: Interested persons may submit written comments about the rule proposals to Joel H. Peck, Clerk, State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218. Alternatively, persons may submit their comments electronically by following the instructions on the Commission’s website NOTE: Comments must reference Case No. SEC-2012-00038 AND be received on or before March 1, 2013.  ¶60,404 through ¶60,465.

Depositor Not Liable Under Virginia Law for Misstatements in an Offering of Mortgage-Backed Securities. In Federal Housing Finance Agency v. Barclays Bank PLC, a federal district court held that a depositor and associated individuals could not be held liable under the Virginia Securities Act for misstatements in an offering of mortgage-backed securities because the defendants did not themselves sell the securities to the plaintiff. The court reasoned that unlike the federal Securities Act of 1933, the Virginia Securities Act requires contractual privity between the plaintiff and the defendant because the Virginia legislature conspicuously omitted the term "offer" from the statute’s private liability provision. Consequently parties, including depositors, who do not pass title to a plaintiff are not civilly liable under the Act. Accordingly, the court dismissed the plaintiff’s primary and control person liability claims. Federal Housing Finance Agency v. Barclays Bank PLC (SD NY) is reported at ¶75,010.


Aspen Federal Securities Publications  

The Business Judgment Rule: Fiduciary Duties of Corporate Directors, Sixth Edition, by Stephen A. Radin. The 2012 Supplement is now available online. The expanded Sixth Edition explores developments in the law in Delaware and other jurisdictions that have addressed the business judgment rule and related corporate governance issues. This highly regarded text is an invaluable research tool. The author seamlessly combines cases, statutory provisions, and commentary to help the reader make sense of the constantly changing body of law, even as the courts struggle to adapt the rule in new contexts. The 2012 Supplement updates the main text with an exhaustive analysis of many judicial and regulatory developments relating to the business judgment rule and directors' fiduciary duties. Highlights include: almost 500 cases decided since publication of the Sixth Edition in 2009; the latest control transaction decisions, including, among many others, Lyondell, Airgas, Barnes & Noble, Del Monte, Cogent, Dollar Thrifty,and eBay; the latest controlling shareholder decisions; the most recent derivative action decisions and the duty of oversight following the financial crisis, including decisions such as AIG, Bank of America, Bear Stearns, Citigroup, Countrywide, Merrill Lynch, Massey,and Dow; Rule 23.1 demands and refusals of demands; Section 220 demands to inspect books and records following King; the latest decisions on special committees; indemnification and insurance; and all subjects explored around the country, including many decisions outside Delaware, construing both Delaware law and the laws of other states.

2013 Handbook for Preparing SEC Annual Reports and Proxy Statements, by Lawrence D. Levin, Adam R. Klein. The 2013 Edition is now available online. This excellent sourcebook is for all those who have responsibility for preparing and reviewing the following annual disclosure documents for public companies: the annual report on Form 10-K, the annual meeting proxy statement, and the annual report to shareholders. In addition to a comprehensive analysis of the various rules and forms that apply to these documents, this publication contains practical guidance based on the authors’ own experiences and those of their colleagues in representing various public companies over the years. Where appropriate, it references informal SEC guidance from its Interpretive Releases and its Division of Corporation Finance’s Compliance and Disclosure Interpretations. Various examples have been included to assist the user in complying with the complicated federal securities laws and preparing proper disclosure. The authors have also highlighted where relevant the interplay among the SEC rules and those of the national securities exchanges and state corporate law.

U.S. Regulation of the International Securities and Derivatives Markets, Tenth Edition, by Edward F. Greene, Alan L. Beller, Edward J. Rosen, Leslie N. Silverman, Daniel A. Braverman, Sebastian R. Sperber and Nicolar Grabar. A Special Report is now available online. This resource provides the only available comprehensive analysis of the application of U.S. securities and commodities laws to participants and transactions in securities and derivatives in the international capital and financial markets. The publication provides in-depth analysis of the legal framework for all types of securities offerings—from registered IPOs to Rule 144A offerings and from common stock to highly structured instruments. It also offers guidance on U.S. regulations governing securities brokers and dealers, foreign banks, investment companies and investment advisers, as well as futures commission merchants, dealers in swaps and security-based swaps, major participants in swaps and security-based swaps, commodity pool operators, and commodity trading advisors. This Special Report analyzes 2012 developments in the United States and Europe with respect to regulation of the banking, securities, and derivatives industries. It first addresses the U.S. JOBS Act, passed in April 2012, and describes the new regulatory regime for offerings by “emerging growth companies.” Chapter 1 also covers the SEC’s proposed rules eliminating the ban on general solicitation and general advertising in certain Regulation D and Rule 144A private placements and discusses the likely effect of those rules if they are adopted as proposed. Chapter 2 covers the SEC rules implementing conflict minerals disclosures and resource extraction payments disclosures. The SEC adopted a new Specialized Disclosure Report, Form SD, for this purpose, and this chapter provides guidance to companies on complying with the new requirements. Chapter 3 addresses the final rules adopted by the SEC implementing the compensation committee independence requirements of Dodd-Frank and the related proposed NYSE and NASDAQ rules imposing listing conditions related to compensation committee independence requirements. Chapter 4 addresses the status of bank regulatory developments in the United States two years after the enactment of the Dodd-Frank Act. Chapter 5 discusses the extraterritorial application of recent legislation in the United States and Europe. Chapter 6 covers U.S. reporting and withholding tax obligations under FATCA and provides guidance to foreign financial institutions that come within its scope. Chapter 7 covers recent regulatory developments in Europe affecting the banking and securities industries. This chapter also provides an update on the status of selected EU financial services directives on securities offerings and ongoing reporting, including, among others, the Markets in Financial Instruments Directive, the Prospectus Directive and the Transparency Directive.

Securitization of Financial Assets, Edited by Jason H. P. Kravitt. The Third Edition is now available online. This work provides a series of portals through which the authors enable the user to enter any particular issue, acquaint the user with its general terms, and provide the user with the intellectual foundation and appropriate sources with which to pursue the issue, or related issues, on his or her own. Part One consists of a series of issue-spotting and structuring chapters designed to enable the user to enter the substantive law chapters in Part Two, fully oriented to the broad significance of any particular legal or accounting issue or groups of legal issues, as well as the relation of this issue or issues to other issues and to particular structures. Part Two contains more detailed discussions of substantive law issues. Highlights of this Third Edition consists of complete revisions of and additions to the following chapters: Chapter 1, The Nature of Securitization, provides an updated overview of the trends in the subject area, including analysis of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and its implications for securitization practices; Chapter 2, Outline and Glossary, gives a chapter-by-chapter topical view of the treatise’s coverage, as well as new and updated terms and acronyms contained therein; Chapter 3, Identifying Legal, Accounting & Related Issues, previews the latest developments in several areas, explained in detail in the cross-referenced chapters, including the impact of Dodd-Frank reforms, the Basel Accords standards, and Regulation D and reserve requirements; Chapter 4, A Brief Summary of Structures Utilized in the Securitization of Financial Assets, describes the latest developments in the use of certain investment vehicles; Chapter 5, Bankruptcy, analyzes the circumstances in which a banking or savings institution may be ineligible for relief under the Bankruptcy Code; Chapter 9, The Role of the Trustee in Securitization Transactions, updates discussions concerning the trustee’s traditional role in corporate finance and provides analysis of tax reporting requirements, illustrative litigations, and other industry developments; Chapter 13, Bank & S&L Regulatory Considerations, analyzes recent developments, such as the impact of the Basel Accords on capital issues and Dodd-Frank financial reforms, such as the Volcker Rule regarding private fund restrictions; and Chapter 17, Eligibility for Investment, includes highlights to the key changes to date under the financial reform initiatives.


IPO Vital Signs

IPO Vital Signs, an advanced IPO research analysis tool, assists IPO professionals and pre-IPO companies satisfy their most challenging research needs and answers hundreds of mission critical questions for all the players in the IPO process. IPO Vital Signs’ tabular data analyses focus on issues surrounding client advisement, deal negotiation, and prospectus disclosure.

IPO Week in Review, a weekly e-newsletter to keep professionals up to date with recent filing and going public activity, is an important element of the IPO Vital Signs system or is available by separate subscription. Coverage includes a monthly feature article on recent trends in going public in the U.S.

To see how an IPO Vital Sign works click on the Vital Sign title below:


#1000 - IPO Filings 
An interactive table that lists every company to file an initial IPO registration statement.
Use IPO Vital Sign #1000 to...

  • Locate comparable IPO issuers by SIC code, lead manager, issuer's law firm, etc.
  • Analyze IPO professional activity in terms of number of IPOs filed

Tip! Change the date range by clicking on For the period in the upper left hand corner of the IPO Vital Sign. Use the drop down boxes to select new Start and End Dates. Click the [REFRESH] button to obtain the new date range’s data.



A new research tool powered by the Securities Redbook (Securities Act Handbook), RBsource offers you securities laws, rules, regulations and forms together with related SEC guidance and interpretations. With RBsource, you will have SEC guidance related to a specific law, regulation or rule at your fingertips without the need of further searching or browsing. RBsource uniquely associates related content, going beyond the limits of standard searching making research more streamlined and productive. This intuitive research tool will drastically reduce your research time and provide the unparalleled confidence expected from the trusted Securities Act Handbook.

SEC Rulemaking Activity

  • 34-68668—Lost Securityholders and Unresponsive Payees (January 16, 2013).

The SEC adopted rules to implement Exchange Act Section 17A(g) (added by Dodd-Frank Act Section 929W) to require broker-dealers to locate lost and unresponsive payees. The final rule added Exchange Act Rule 15b1-6 and revised Rules 17Ad-7(i) and 17Ad-17. These rule changes are effective March 25, 2013, but compliance is delayed until January 23, 2014. Amended Rule 17Ad-17 applies prospectively only.

  • 33-9382—Adoption of Updated EDGAR Filer Manual (January 14, 2013).

The EDGAR Filer Manual has been updated to add submission type “IRANNOTICE” and to require certain documents to be filed in PDF format. The revisions are effective January 23, 2013.

  • 33-9383—Extension of Exemptions for Security-Based Swaps (January 29, 2013).

The SEC has extended the sunset date of interim exemptions for pre-Dodd-Frank securities-based swap agreements from February 11, 2013 to February 11, 2014. The affected rules govern security-based swap agreements that are “securities” as of Dodd-Frank Title VII’s effective date (July 16, 2011). The SEC also said CorpFin’s Cleary Gottlieb no-action letter for security-based swaps based on or referencing only loans or loan indexes outside the term “security-based swap agreement” is effective until the interim rules expire. The new sunset is effective when published in the Federal Register.

  • 34-68660—Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital Requirements for Broker-Dealers (January 15, 2013).

The SEC has extended the comment period on proposed Exchange Act rules that revise broker-dealers’ capital rules and impose capital, margin, and segregation requirements on security-based swap dealers and major security-based swap participants (See Release No. 34-68071). Comments were due by January 22, 2013, but may now be submitted until February 22, 2013.

The Road Ahead

Upcoming rulemaking activity will continue to reshape the securities regulation landscape. The items below are a selection of expected near-term regulatory actions. The SEC’s schedule is subject to change at any time. RBsource includes daily updates to securities regulations affected by final Commission action.

On January 24, 2013, President Barack Obama nominated Mary Jo White to be the next SEC chairman. Upon Senate confirmation, Ms. White would be the third SEC chairman in only a short time frame. She would replace Elisse B. Walter, whom President Obama designated chairman to replace Mary L. Shapiro, who left the SEC last December.

Ms. White would inherit unfinished Dodd-Frank and JOBS Act business, looming money market mutual fund reforms, and an ongoing effort to improve SEC enforcement. Ms. White also will face a regulatory environment where the SEC’s rulemaking cost-benefit analyses and Dodd-Frank mandates have been questioned by Congress and the private sector. Ms. White also may need to deal with Dodd-Frank corrections legislation.

Ms. White currently is a partner at Debevoise & Plimpton LLP. Her law firm biography states that she focuses on white collar defense and investigations, securities, corporate governance, healthcare, and consumer finance. Ms. White rejoined Debevoise in 2002 after serving as U.S. Attorney in New York City, where she prosecuted high-profile white collar criminal and terrorism cases. Ms. White also was a director of the NASDAQ Stock Market where she was on the company’s Executive, Audit and Policy Committee.

At Ms. White’s confirmation hearing, Senators may ask when she plans to issue JOBS Act rules and how flexible the SEC will be in drafting unfinished Dodd-Frank rules. Specifically, Congress and industry have asked the SEC and banking regulators to craft a supple final Volcker rule. Ms. White also may be asked about potential conflicts arising from her private law practice and her marriage to John W. White, former SEC Corp Fin director (2006-08) and current partner at Cravath, Swaine & Moore LLP. No date has been set for Ms. White’s confirmation hearing.


Hot Topic of the Month

This month's hot topic is shareholder proposals. A shareholder proposal is a shareholder's recommendation that the company and/or its board of directors take an action, which the shareholder intends to present at a shareholder meeting. Exchange Act Rule 14a-8 dictates when a company must include shareholder proposals in its proxy materials issued before an annual or special shareholder meeting. A registrant that receives a shareholder proposal within the prescribed time before the solicitation must include the proposal in its proxy statement, identify the proposal in the form of a proxy, and give recipients of the proxy material a means by which to vote on the proposal, if the proposing shareholder meets the eligibility conditions and if the proposal does not fall within any enumerated ground for exclusion.

Rule 14a-8 enumerates thirteen substantive grounds on which management may exclude proposals. Exclusion is proper, for example, if the proposal: would require the registrant to violate state, federal, or foreign law; concerns the election of directors; violates any of the SEC's proxy rules, including the anti-fraud rule; concerns the redress of a personal claim or grievance against the company; or concerns matters that relate to the registrant's ordinary business operations. The company has the burden of showing that it is entitled to exclude the proposal and must submit to both the SEC and the proponent copies of the proposal, an explanation of the reasons why the company believes that exclusion is proper and a supporting opinion of counsel, in the case of grounds based on state or foreign law. A company that includes a shareholder proposal in its proxy materials may elect also to include a statement opposing the proposal.

There are also procedural and eligibility grounds on which a company may rely to exclude proposals. At the time a proposal is submitted, the proponent must demonstrate his or her eligibility. A proponent must be a record or beneficial owner of at least one percent or $2,000 in market value of securities entitled to be voted at the meeting on the proposal. Additionally, the proponent must have held the securities for at least one year before submission and must continue to hold those securities through the date of the meeting. A shareholder may submit only one proposal to a company for a given shareholder meeting, and the proposal and any supporting statement cannot exceed 500 words. Finally, the proponent, or a qualified representative must attend the meeting to present the proposal. If a proponent fails to comply with the above procedural or eligibility requirements, the company may exclude the proposal under Rule 14a-8(f).
We publish information in a wide range of resources (e.g., Federal Securities Law Reporter, SEC Today, Securities Regulation - Loss & Seligman, etc.), and document types (cases, laws, regulations, newsletter articles, treatise discussion). For example:

  • Federal Securities Law Reporter
    • Exchange Act Rule 14a-8, at ¶24,012
    • No-Action Letters (e.g., Costco Wholesale Corp. at ¶77,102 and Starbucks Corp.  at ¶77,103)
    • CCH Explanations (e.g., ¶24,030.070 and ¶24,151.065)
    • Report letters (e.g., 12-5-12, "Costco May Exclude Proposal Seeking Proxy Advisory Competition," and "Starbucks Allowed to Exclude Majority Voting Proposal from Proxy Materials")
  • SEC Staff Legal Bulletin No. 14 at ¶60,014
  • SEC Staff Legal Bulletin No. 14B at ¶60,014B
  • SEC Staff Legal Bulletin No. 14G at ¶60,014G
  • SEC Today, PLI Panelists Review Developments In Corporate Social Responsibility (9-14-12)
  • Insights – Amy L. Goodman (e.g., “Dialogue with the Director of the SEC Division of Corporation Finance” (9-30-12)
  • Securities Regulation – Loss, Seligman & Paredes (e.g., Chapter 6.C.4, Contested Solicitations and Security Holder Proposals)
  • Regulation of Corporate Disclosure – Brown (e.g., §2.02[1][a])
  • Regulation of Securities: SEC Answer Book – Levy (e.g., Q11:3, "How does the shareholder proposal process work in general?"
  • Jim Hamilton’s World of Securities Regulation (e.g. "Corporate Secretaries Society Has Concerns with ISS Policy on Board Response to Majority-Approved Shareholder Proposals" (10-31-12)